Lehman the next Bear?

[Supercilious]

http://www.reuters.com/article/busin...16473020080904

TOKYO (Reuters) - Japan's Mitsubishi UFJ Financial Group (8306.T: Quote, Profile, Research, Stock Buzz) said it has no plans to invest in Lehman Brothers (LEH.N: Quote, Profile, Research, Stock Buzz), denying a media report that it may bid for a stake in the subprime-hit U.S. investment bank.

The Times of London said Japan's largest bank was ready to bid for a "substantial stake" of Lehman, and may seek control of the Wall Street firm, sending shares of the U.S. bank higher in after-hours trade.
Lehman is under pressure to raise capital after racking up $7 billion in losses and write-downs from the global credit crisis. It still has more than $60 billion of mortgage and commercial real estate exposure.
The Times, citing senior sources close to MUFG and source at a Tokyo brokerage, said the bid would likely come after an expected fall in Lehman's stock price following its quarterly earnings results next week.
However, a spokesman for Mitsubishi UFJ, Hideki Furumoto, told Reuters the report was not true.
Separately, an executive at the Japanese bank said it had "absolutely no plans" to invest in Lehman. The executive spoke on condition of anonymity.
Lehman Brothers declined to comment on the report.

Hey, if Lehman lends me $4.75 bil I'll take 25% of it's stock... What? Merril did it and it worked ...

[D-Mack]

Re: Lehman the next Bear?

Korea said it's insolvent, why should Japan say something different ?

KDB would be an unlikely savior. Korean newspapers have reported that KDB declined to invest in Lehman as recently as June. And by persisting in talks with Lehman, KDB is breaking with a long tradition of Korean caution in the financial markets. Other South Korean investment firms have rejected Lehman, too: Korean daily Chosun Ilbo reported that Korea Investment Corp.–which invested $2 billion in Merrill Lynch–rejected the chance to put money in Lehman “after feasibility studies and a review of investment opportunities.”

That article also included the quote of an unnamed senior government official who considered Lehman a terminal case: “After a review of its account book, we found that its insolvency was serious. Then if insolvency becomes more serious, we would have to pour additional funds. But we concluded that it was too risky for KDB to take the deal.”

http://blogs.wsj.com/deals/2008/09/0...korean-savior/

Why was Bear killed ? Was it for JPM, is there a theory out?

Bringing Down Bear Began as $1.7 Million of Options (Update2)

By Gary Matsumoto

Aug. 11 (Bloomberg) -- On March 11, the day the Federal Reserve attempted to shore up confidence in the credit markets with a $200 billion lending program that for the first time monetized Wall Street's devalued collateral, somebody else decided Bear Stearns Cos. was going to collapse.

In a gambit with such low odds of success that traders question its legitimacy, someone wagered $1.7 million that Bear Stearns shares would suffer an unprecedented decline within days. Options specialists are convinced that the buyer, or buyers, made a concerted effort to drive the fifth-biggest U.S. securities firm out of business and, in the process, reap a profit of more than $270 million.

Whoever placed the bet used so-called put options that gave purchasers the right to sell 5.7 million Bear Stearns shares for $30 each and 165,000 shares for $25 apiece just nine days later, data compiled by Bloomberg show. That was less than half the $62.97 closing price in New York Stock Exchange composite trading on March 11. The buyers were confident the stock would crash.

``Even if I were the most bearish man on Earth, I can't imagine buying puts 50 percent below the price with just over a week to expiration,'' said Thomas Haugh, general partner of Chicago-based options trading firm PTI Securities & Futures LP. ``It's not even on the page of rational behavior, unless you know something.''

...

http://www.bloomberg.com/apps/news?p...TjE&refer=home

[jmdpet]

Re: Lehman the next Bear?

Looks like something is happening today. LEH down 30%+ right now. Here's what Barry Ritholtz has to say:

http://bigpicture.typepad.com/commen...-goes-boo.html

[Tulpen]

Re: Lehman the next Bear?

Looks like it is game over for Lehman.

Watch the Fed come in quickly to have it arranged as a "takeover". For we would not want anyone to see the books of this company when it declares bankruptcy now would we? ;)

Companies like Legg Mason and Axa should start feeling uncomfortable with all the GSE and now also Lehman stock prices evaporating.

By the way the talk ending with Korea will set a precedent if Lehman does go under. Foreign entities will (finally?) recognize the US is trying to sell garbage to them.

[Mega]

Re: Lehman the next Bear?

Down 35% today so far!
Mike

[Supercilious]

Re: Lehman the next Bear?

Not sure about anything significant happening today. I believe some people are going to make good money by buying under $9. I would expect soon another load of BS about a new deal that would pump up the shares, later this week, back to a completely baseless value .

The market is scared after F&F collapse and some ruthless players are taking advantage of the atmosphere of uncertainty. Look what happened with UAUA yesterday... I hope somebody goes to jail for that. IMHO that was no accident...

If you want to have a good laugh please read this excellent satire from Seeking Alpha:

http://seekingalpha.com/article/8550...fett?source=mb

I couldn't stop laughing for hours ... it's a perfect radiography of Lehman's corporate BS

[Mega]

Re: Lehman the next Bear?

Now 45%, they are circling the drain hole!
Mike

[Supercilious]

Re: Lehman the next Bear?

Lehman will be fine. Here is the proof:

http://www.cnbc.com/id/15840232?video=849722761

(Fred I think this board really needs an ROTFL emoticon in order to deal with Cramer's clips. it not enough )

[touchring]

Re: Lehman the next Bear?

By the way the talk ending with Korea will set a precedent if Lehman does go under. Foreign entities will (finally?) recognize the US is trying to sell garbage to them.

The SWFs go for the big ones. Lehman is too small and unlikely to survive the financial crisis.

[Chris]

Re: Lehman the next Bear?

Any thoughts on Citi?

[c1ue]

Re: Lehman the next Bear?

The SWFs go for the big ones. Lehman is too small and unlikely to survive the financial crisis.

Touchring,

The SWF capitalizations of financial companies hasn't been very positive. From Mauldin's newsletter:

-21% as the best performer? Ouch!

[Supercilious]

Re: Lehman the next Bear?

Touchring,

The SWF capitalizations of financial companies hasn't been very positive. From Mauldin's newsletter:



-21% as the best performer? Ouch!

You forgot to mention the Chinese investment in Blackstone... That's another epic story

But going back to the subject at hand: I smell something really fishy with Lehman stock. it looks to me like a perfect engineering movement.

Don't get me wrong. I beleive that Lehman's books are appauling being smack right in the middle with other big banks. The ship is full of holes.

LEH was one of my three favorites for collapse, and Saturday I had 30% of my portfolio in LEH shorts (at $16). I lingered more to catch the downfall from F&F intending to close postitions on Tuesday.

But what happended today combined with yesterday seems ... unnatural.

It looks to me like some heavy hand is toying with the stock in order to depress, but not to outright kill. Therefore, I've closed all shorts at $7.50 and switched to longs.

If I'm right this may prove as better than Bear and F&F. If I'm wrong I will make only a small margin and loose a great oportunity.

This is not a bet on Lehman. It's a bet on the inhability of the SEC to regulate market makers and hedge funds by providing a fair, open and transparent process of stock exchange.

But maybe I'm wrong and the markets are fair and open.

[Tulpen]

Re: Lehman the next Bear?

Simply unbelievable: http://www.nj.com/news/index.ssf/200...ds_invest.html

"New Jersey government retirees picked up a $180 million stake in the troubled Lehman Brothers investment firm today, as state investment officials continued to try to profit from the cash woes of banking giants stung by the subprime mortgage crisis."

This is not investment but gambling. I would not be surprised someone is doing a "buddy" a favor here.

And then in January: http://www.nj.com/business/index.ssf...ds_in_cit.html

"The division, which manages the pension fund for some 700,000 current and future retirees, invested $400 million in Citigroup preferred stock and $300 million in Merrill Lynch preferred stock, according to announcements made by the two banks yesterday."

[GRG55]

Re: Lehman the next Bear?

Simply unbelievable: http://www.nj.com/news/index.ssf/200...ds_invest.html

"New Jersey government retirees picked up a $180 million stake in the troubled Lehman Brothers investment firm today, as state investment officials continued to try to profit from the cash woes of banking giants stung by the subprime mortgage crisis."

This is not investment but gambling. I would not be surprised someone is doing a "buddy" a favor here.

And then in January: http://www.nj.com/business/index.ssf...ds_in_cit.html

"The division, which manages the pension fund for some 700,000 current and future retirees, invested $400 million in Citigroup preferred stock and $300 million in Merrill Lynch preferred stock, according to announcements made by the two banks yesterday."

This is what happens when people are hired, at outsized compensation, to manage OPM. It's just another example of the heads I win, tails you lose scenario.

[GRG55]

Re: Lehman the next Bear?

Can U spell "moral hazard"?

"...Given the firm's deep financial troubles, a deal of any sort is far from certain, according to people familiar with the situation. In addition, prospective buyers, which also could include Barclays PLC, would likely want the U.S. government to help shield them from future losses from any such transaction, these people said, as happened in March, when Bear Stearns Cos. was forced into a deal to be acquired by J.P. Morgan Chase & Co. In that deal, the federal government agreed to absorb as much as $29 billion in potential losses...

...A number of prospective buyers would likely "come out of the woodwork," if the U.S. government were to offer some form of protection against future losses, said one person monitoring the process..."

No further comment necessary...

Lehman Races to Find a Buyer

By MATTHEW KARNITSCHNIG, CARRICK MOLLENKAMP, SUSANNE CRAIG and ANNELENA LOBB
September 12, 2008; Page A1

The investment bank Lehman Brothers Holdings Inc. spent Thursday energetically shopping itself to potential buyers -- among them Bank of America Corp. -- just a day after insisting it had found a way to patch up its massive real-estate-related losses...